Global markets were lower on Friday, with the US market (S&P 500 index -0.14%) slipping as a resurgence of covid-19 cases (particularly in Europe) weighed down on market sentiment.
Equities took a hit after Austria announced it would re-enter a full national lockdown due to a spike in Covid cases. That followed new restrictions for unvaccinated people in Germany as a fourth wave sent daily cases to a record high, while parts of Germany and the Netherlands closed some non-essential businesses. Meanwhile, shares of Moderna jumped nearly 5% after the Food and Drug Administration cleared its vaccine booster shot for all adults in the US.
In terms of sector moves, Tech shares were generally higher as the covid scare caused US Treasury yields to ease. While reopening plays such as travel and energy sectors were heavily hit.
European Markets (Stoxx 600 index -0.3%) were lower as losses were broad based following covid-19 related restrictions I touched on above.
Closer to home, the key event for the week ahead will be the latest RBNZ rate call, with the market split as to whether the RBNZ will increase the OCR by 0.25% or 0.50%, with banks already moving lending rates higher in advance.
Ryman Healthcare (RYM:NZX)
Retirement village developer Ryman Healthcare dropped -4.8% on Friday experiencing the biggest fall on the NZX after reported a weak result for the first half of the 2022 financial year.
Underlying profit after tax came in at $95.8m, up only +8% which was well off expectations and compared to weak period, which was impacted by a greater lockdown restrictions. Weakness was due to new sales with lower margins, lower prices and lower unit sales which also drove a significant rise in net debt, up $180m from last year.
Given the scale of Ryman’s business it is now now more difficult for them to achieve strong growth, and with debt levels rising limits their ability to expand construction activity is limited.
The heavy share price fall can be attributed to their rich valuation, priced well above its peers, and for that reason we’ve always preferred Oceania or Summerset as our favoured retirement village operator stocks – offering better growth potential while being more attractively priced.
Australia & New Zealand Market Movers
The Australian market was up on Friday (ASX 200 index +0.2%). In a choppy session, Materials led gains getting a boost on commodity prices, while Financials ended the session flat following two days of heavy losses.
Technology stocks were the worst performer on the day given back some gains earlier in the week. However, Next DC rose +0.5% after CEO said the company has made strong start towards meeting its 2022 guidance at is AGM on Friday.
Cown Resorts led gains jumping +16.6% after US investment giant Blackstone made a takeover bid of $12.5 cash per share, which is higher than the $12.35 offer which was rejected in in May.
Treasury Wines rose +4%, a strong gain after initially announcing the purchase of Frank Family Vineyards on Thursday.
The New Zealand market was down on Friday (NZX 50 index -0.3%) with most of the market trading in the red.
Following Ryman’s lead, other retirement village operators we also weaker Arvida (-3.1%) and Summerset (-1.9%) slipped lower, while Oceania remained unchanged.
Pushpay continued to trade lower falling -2.7%, while Auckland International Airport which received a boost following Sydney’s Takeover bid fell -2.7% as well.
Steel & Tube Holdings jumped 4.1% after it issued earnings guidance “above $17m” which is more than double what it earned last year – driven by volume growth, positive market conditions, improved margin, and ongoing reduction in operating costs
3 Things Markets will be Watching this Week
- Key events this week in Japan and the US who will reportedly make a joint announcement on the release of oil reserves as soon as this week.
- Locally, RBNZ will may an OCR review on Wednesday and latest retail sales print in Australia.
- Earnings release from Kiwi Property Group, Metro Performance Glass, Webjet and Fisher & Paykel Healthcare.